Section 54

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pradeep agrawal (Querist)
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01 August 2011 dear sir
pls explain / clarify
LTCGon sale of resi. house property is exempted if CG is invested in purchase of another resi. house property within due date

Can assessee invest in more than one resi. house property ? or only investment in one house property is to be exempted.

Is is required to not owing another house property on the date of sale of house property.

sir, pls

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 August 2011 Reinvestment benefit can't be enjoyed for investment in more than one house.
Citation :- Mr. Pawan Arya Vs.CIT 2011-TIOL-01-HC-P&H-IT

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pradeep agrawal

pradeep agrawal (Querist)
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01 August 2011 B. Chackrapani Sir,
pls. clarify , is it necessary to have only one house at the time of sale of house property. One house i.e. purchased within one year before sale of LTCG property for claiming exemption limit.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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23 July 2025 Your Key Questions Answered:
🔹 1. Can exemption under Section 54 be claimed for purchase of more than one residential house?
No — as per the law applicable at that time (AY 2011–12), Section 54 allowed exemption for investment in only one residential house property in India.

This position has been upheld in various High Court decisions (like Pawan Arya v. CIT).

The law was amended later (from AY 2020–21) to allow investment in two houses (only if capital gains do not exceed ₹2 crore and only once in a lifetime).

✅ So in AY 2011–12, investment in multiple houses will not qualify. You get exemption for only one.

🔹 2. Is it necessary that the assessee should not own more than one house at the time of sale?
No, there was no restriction in Section 54 (at that time) saying that the assessee must not own any other residential house at the time of sale.

You can own multiple houses and still claim exemption as long as you invest the capital gains in one new residential house within the stipulated time limits.

🟢 Owning other properties doesn’t disqualify you from claiming exemption under Section 54.

🔹 3. Can a house purchased within 1 year before the date of transfer of the old house be considered?
Yes, Section 54 specifically allows exemption if the new house is:

Purchased within 1 year before the date of sale, or

Purchased within 2 years after, or

Constructed within 3 years after the date of sale of the original house.

So, a house bought within 1 year before the sale of the original asset is eligible.

🧾 Summary:
Question Answer
Can I invest in more than one house? ❌ No (only one house allowed under Section 54 in AY 2011–12)
Must I not own any other house on the date of sale? ✅ No such restriction; owning other houses is allowed
Is house purchased within 1 year before sale eligible? ✅ Yes, allowed under Section 54

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